In the past decade, despite its massive reliance on fossil fuels, China has steadily increased its investments in sustainable energy to create a green economy, becoming carbon neutral by 2060.
And they don’t stop their plans with their environment. The government has taken big steps to reduce the nation’s rampant economic inequality. In this context, ESG reports became extremely important.
In fact, in 2016, the People’s Bank of China (the Chinese central bank) and the China Security Regulatory Commission (CSRC) laid Guiding Opinions on Building a Green Finance System, which is essentially a mandate for an environmental information disclosure system.
As a result, in 2018, the CSRC revisited and revised the Listed Company Governance Code and implemented an amendment that included the responsibility of listed companies to disclose ESG information.
The Asset Management Association of China (AMAC) issued the first Green Investment Guide (Trial) and the Research Report on ESG Evaluation System for Chinese Listed Companies (2018), which aims to guide investors to delve into green investment activities and advocating listed companies to refine and enhance information disclosure and corporate governance.
In 2020, Chinese President Xi Jinping emphasized the nation’s intention to become carbon neutral by 2060. Further reforms and revisions to an existing regulation were made to better govern companies as they all mitigate their carbon footprint by transitioning to a much greener economy.
In conclusion, it is often best to work alongside regulatory forces to remain profitable in the modern economic landscape rather than against them. Leveraging the ESG report can be a significant step to showcase commitment towards the stated national goal and attract investors and governmental subsidies.